Tax Fundamentals for Accountants: The Taxing Issue of Trusts - a series of 5 video

Program 1: Family Trust Elections

If your client base uses trusts, some will have made family trust elections and some will need to. This presentation examines the nature of FTEs, why they are made, how to make them and how to deal with the problems they cause.

• What is a family trust election?

• Why do you make a family trust election?

• How to make a family trust election

• Selecting the right test individual

• FTE vs IIEs

• Effect of FTEs and ITEs

• Traps and disadvantages in family trust elections

Program 2: A Division 7A Primer

No accountant can advise a family with a private company on tax without a basic understanding of Division 7A. This presentation provides a practical introduction to Division 7A.

• Standard client scenarios

• Loans and options with loans

• Loans and trust distributions to corporate beneficiaries – options etc.

• Dealing with unpaid present entitlements – loans and subtrusts

• Management of typical Division 7A situations in practice

Program 3: Tips and Traps in Trust Tax returns

All trusts that derive income must lodge an income tax return. Sounds simple enough in theory, but there are traps lurking beneath the surface. In this practical session, learn what to watch out for when doing trust tax returns, including:

• Getting distributions right

  • FTEs and managing distributions to avoid FDT

  • Lending money out of the trust interest free - FDT liability

  • 100A and tracing issues

• Interposed entity elections:

  • Does the money flow through?

  • Do the test individuals line up?

• Fixed trusts:

  • Understanding the differences between accounting and tax income

  • Avoiding erosion of your cost base under E4

Program 4: How to Read a Trust Deed: A Primer for Accountants

The Australian courts have dealt with many examples where trustees have inadvertently breached the trust deed because either they, or their accountants, have failed to read the terms of the deed. This session examines the key terms advisers need to watch out for, including:

• Definition of income

• Beneficiaries – who are they?

• Classification of income – power to reclassify

• Trustee discretions

• Powers of variation

• Vesting date issues

Program 5: Drafting Trustee Resolutions

Effective trustee resolutions are the foundation of good tax planning of trusts. If poorly drafted, trustee resolutions may be invalid and leave clients exposed to an unintended tax outcome. This session examines how to draft effective trustee resolutions, with a focus on the following:

• Net income of the trust estate vs trust income

• Distributable income

• Present entitlement

• Create a contingent entitlement – when do you need it and how do you draft it

• Specific entitlement, capital gains and franked dividends

• Takers in default – when they get the income